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Papa John’s to remove founder from advertising

Steve Ritchie, who replaced Papa John’s International Inc.’s founder John Schnatter as CEO at the beginning of the year, said in a statement Friday that Schnatter will “no longer be in any of the advertising or marketing materials associated with the brand.”

Schnatter had long starred in many of the television advertisements of the Louisville, Ky.,-based Pizza chain, which is named after him.

“Papa John’s is not an individual,” Ritchie said.

“Papa John’s is a pizza company with 120,000 corporate and franchise team members around the world. Our employees represent all walks of life, and we are committed to fostering an inclusive and equitable workplace for all. Racism and any insensitive language, no matter what the context simply cannot — and will not — be tolerated at any level of our company.”

In a Securities & Exchange Commission filing Sunday, management also said it was evicting Schnatter from Papa John's Louisville, Ky., offices, where he had a sublease and terminating an agreement from 2007 that defined his role as the company's founder.

According to the filing, the so-called "Agreement for Service as Founder" allowed Schnatter to attend major corporate events, visit franchises, participate in meetings with management and investors and act "as advertising and brand spokesperson for the Company."

The termination of the founder agreement goes into effect in 30 days. The eviction goes into effect in 90 days.

Despite the changes, Papa John's stock opened down by more than 1 percent on Monday.

Public reaction was swift, as was the action of numerous sports teams that had marketing relationships with Papa John’s, including Major League Baseball, which suspended its Papa Slam discount deal.

Ritchie said he would lead the chain in trying to rebuild trust with the public “from the inside out.”

“We will be engaging a broad set of stakeholders to chart a course forward that demonstrates our commitment to diversity, equity and inclusion,” he said.

That would start with retaining an independent expert to audit existing systems and polices “related to diversity and inclusion, supplier engagement and Papa John’s culture.”

He added, “The entire senior management team will also be visiting key locations across the country and hold listening sessions with employees in our stores to talk about what they are seeing and give them a platform to voice their concerns. To follow-up, we will initiate two-way conversations to invite ongoing feedback from employees and franchisees to ensure that their voices are heard.

“I will personally be leading this effort because there is nothing more important for Papa John’s right now. We want to regain trust, though I know we need to earn it. We will demonstrate that a diverse and inclusive culture exists at Papa John’s through our deeds and actions.”

Ritchie, who has been with Papa John’s since 1996, was promoted from president to CEO following another Schnatter-related scandal in which the founder blamed the chain’s poor earnings on the National Football League’s failure to quell players’ silent on-field protests during the singing of the national anthem.

For the most recent quarter, ended April 1, Papa John’s reported a 5.3-percent same-store sales decline at North American locations. Net income was down 41.1 percent to $16.7 million and revenue as down 4.9 percent to $427.4 million.